Oyster Point Gets $93M To Clear Up Dry Eye With a Nasal Spray

Dry eye disease affects millions of people in the U.S., and while several treatments, mostly eye drops, are available, they all have flaws. An emerging startup called Oyster Point Pharmaceuticals is trying a completely different approach—a nasal spray that coaxes the body into making tears. And the company just got enough cash to get that treatment to market, if its final clinical tests are a success.

Oyster Point, a Princeton, NJ startup led by former Ophthotech (NASDAQ: OPHT) executive Jeffrey Nau, has closed a $93 million Series B co-led by Invus and Flying L Partners.

The cash will help bankroll Phase 3 studies of one of two experimental drugs—known as OC-01 and OC-02, respectively—which Oyster Point has been developing in parallel for dry eye. Both drugs work similarly, aiming to stimulate nerves in the face as a way to trigger tear production. And both produced encouraging results in mid-stage tests in 2018.

But Oyster Point will advance only one drug in dry eye, depending on what it hears from regulators this year. The other will end up being tested for a different eye disease, Nau says.

Some 16 million U.S. adults, or almost 7 percent of the population, are diagnosed with dry eye, according to a 2017 study published in the American Journal of Ophthalmology. The disease occurs when the body isn’t making or maintaining enough quality tears—which contain mucous, water, oils, a slew of protective proteins and more—to shield the eyes from foreign invaders and keep their surfaces smooth. The resulting symptoms range from inflammation, irritation, burning, sensitivity to light, blurry vision, and redness.

There are several eye drops available for dry eye. Patients with mild cases can use over-the-counter artificial tears multiple times a day to help keep their eyes lubricated. For more severe cases, there’s cyclosporine (Restasis, from Allergan (NYSE: AGN)) and lifitegrast (Xiidra, from Shire), the only two prescription medications for dry eye, which help boost tear production and reduce inflammation.

Others drugs could be on the way, like an experimental drop, VOS, that Canadian firm Aurinia Pharmaceuticals (NASDAQ: AUPH) hopes to prove is more effective, and tolerable, than cyclosporine (VOS just recently finished mid-stage testing). And generic companies are awaiting the outcome of a long-running court battle by Allergan to protect the patent of its market-leading drug; Allergan has appealed its case to the Supreme Court.

These treatments all have limitations, however, Nau says. Artificial tears don’t last that long and don’t have all the same protective ingredients as natural tears. Nau adds that drops like cyclosporine and lifitegrast don’t work for everyone—and even if they do, they sting the eyes, can take weeks or months to help, and they only address the inflammation associated with dry eye. What’s more, eye drops come with adherence issues, Nau says. “Some patients have trouble putting drops in their eyes. Others don’t like it,” he says.

So Oyster Point is trying something different. It has reformulated two drugs—one already FDA-approved, the other experimental—as nasal sprays, The hope is they might, at minimum, complement other treatments, or at best, obviate the need for them. One (OC-01) uses the same active pharmaceutical ingredient as Pfizer’s varenicline (Chantix), the smoking cessation pill that loses patent protection in 2020 (Oyster Point has a patent to reformulate the drug as a dry eye treatment, Nau says). The other is a reformulated version of TC-6499, a drug that once failed a clinical trial for diabetic gastroparesis at now-defunct Targacept; Oyster Point bought TC-6499 from South San Francsico, CA-based Catalyst Biosciences (NASDAQ: CBIO), which merged with Targacept in 2015. Both work the same way, by targeting molecules on nerve cells called nicotinic acetylcholine receptors (nAChRs).

Several companies have tried, unsuccessfully, to treat neurological diseases by targeting nAChRs; Oyster Point believes the strategy holds promise for dry eye. When puffed into the nose, these drugs bind to nAChRs on a branch of a nerve in the face called the trigeminal nerve, which then sends signals to the eye to produce its own tears. In that sense, OC-01 and OC-02 work similarly to Allergan’s intra-nasal TrueTear device, which uses electrical currents to kickstart tear production. But TrueTear only stimulates nerves while it’s on; OC-01 and OC-02’s benefits last longer, Nau says.

Both OC-01 and OC-02 are sprayed into the nose twice a day. They’re both meant to stimulate production of all three layers of the eye’s tear film, which is critical for generating the type of natural tears that protect the eye. “We actually get a true tear with all of the requisite components to it,” Nau says.

Still, the odds are stacked against Oyster Point. Promising dry eye drugs have a habit of falling short in Phase 3 tests. The disease is “multi-factorial,” Nau says. Patients’ cases vary widely, which can lead to unpredictable results. Some cases of dry eye, for instance, occur when people spend too much time in front of a computer screen and don’t blink enough. Others are symptoms of autoimmune disease or menopause. Patients enrolled in clinical trials might have different disease severities, or something that looks like—but isn’t—dry eye at all.

Some drugs have shown an impact on the “signs” of dry eye, like the amount of tear film. Others have an effect on only the symptoms, like redness. Showing a benefit on both has been elusive—cyclosporine, for example, has been shown only to help improve signs of dry eye. Oyster Point has done both—at least so far, in Phase 2 trials. In separate studies, patients on OC-01 and OC-02 saw a statistically significant improvement, compared to placebo, in symptoms of dry eye and on the “Schirmer” test that evaluates tear production. The most common side effects have been mild, too: sneezing after a spray, or post-nasal drip.

Nau isn’t deterred by all the failures of previous dry eye drugs in clinical testing. The company plans to move forward with Phase 3 trials that are “very similar if not identical” to the successful Phase 2 studies Oyster Point has run, just with more patients, some 200 per study arm, he says. Those studies could start this summer, and if successful, pave the way for an approval filing next year.

“A lot of companies make mistakes by changing up the design,” Nau says. “We think that we’re de-risking the program quite a bit by running the same studies but with a larger sample size.”

Existing investors New Enterprise Associates and Versant Ventures and new backer Vida Ventures contributed to the funding along with Invus and Flying L Partners.